Analysts' picks from ECONOMIC TIMES 15-12-2007
Hindustan Unilever
CMP: Rs 216.95
TARGET PRICE: Rs 254
Credit Suisse has initiated coverage on Hindustan Unilever with an 'outperform' rating and a discounted cash flow based price target of Rs 254. "HUL's underperformance in the past has been due to a combination of a slow market and margin pressure. The company is benefiting from accelerated investments in innovation at the global level and a concurrent increase in brand investments locally," the Credit Suisse note to clients said. "HUL is also benefiting on the cost side through an integrated supply chain. The company is set to deliver strong revenue growth by growing its core in line with the market and expanding its presence in the food and water businesses," the note added.
Dish TV
CMP: Rs 91.60
TARGET PRICE: Rs 120
CLSA Securities has maintained its 'buy' rating on Dish TV and a discounted cash flow-based valuation of Rs 120. "Dish TV's addition of new subscribers has increased from 60,000/month in 1Q to 93,000/month in 2Q and is at 107,000 for the first two months of 3Q. Aided by a new marketing campaign and the festive season, Dish TV added a record 126,000 subscribers in November, taking its subscriber base to 2.64 million, which implies DTH (direct to home) market share of 67%," the CLSA note to clients said. "Dish TV is now well on course to meet our year-end subscriber target of 3 million and with monthly net addition continuing at an average of 100k a month, it should have an estimated 5.5 million DTH subscribers by FY10CL. With the launch of DTH from Reliance and Bharti still 3-6 months away, Dish TV has a chance to consolidate its base," the note added.
McNally Bharat
CMP: Rs 307.15
TARGET PRICE: Rs 340
HDFC Securities has upgraded its rating on McNally Bharat Engineering from hold to 'outperform' with a price target of Rs 340. "Given the huge investments in the metal industry and in mining infrastructure, these businesses of MBE are expected to witness robust growth in the next few years. We expect revenues to register 35% CAGR in the next three years along with margin improvement, with the company increasing its share of revenues from high margin businesses like mineral processing," the HDFC Securities note to clients said. "In view of the above, the company is poised for a robust growth in revenues and an improvement in its financial performance. However, despite the significant run up in the past few months, the stock is trading cheaper (20% discount) vis-a-vis its peer group companies," the note added.
CMP: Rs 216.95
TARGET PRICE: Rs 254
Credit Suisse has initiated coverage on Hindustan Unilever with an 'outperform' rating and a discounted cash flow based price target of Rs 254. "HUL's underperformance in the past has been due to a combination of a slow market and margin pressure. The company is benefiting from accelerated investments in innovation at the global level and a concurrent increase in brand investments locally," the Credit Suisse note to clients said. "HUL is also benefiting on the cost side through an integrated supply chain. The company is set to deliver strong revenue growth by growing its core in line with the market and expanding its presence in the food and water businesses," the note added.
Dish TV
CMP: Rs 91.60
TARGET PRICE: Rs 120
CLSA Securities has maintained its 'buy' rating on Dish TV and a discounted cash flow-based valuation of Rs 120. "Dish TV's addition of new subscribers has increased from 60,000/month in 1Q to 93,000/month in 2Q and is at 107,000 for the first two months of 3Q. Aided by a new marketing campaign and the festive season, Dish TV added a record 126,000 subscribers in November, taking its subscriber base to 2.64 million, which implies DTH (direct to home) market share of 67%," the CLSA note to clients said. "Dish TV is now well on course to meet our year-end subscriber target of 3 million and with monthly net addition continuing at an average of 100k a month, it should have an estimated 5.5 million DTH subscribers by FY10CL. With the launch of DTH from Reliance and Bharti still 3-6 months away, Dish TV has a chance to consolidate its base," the note added.
McNally Bharat
CMP: Rs 307.15
TARGET PRICE: Rs 340
HDFC Securities has upgraded its rating on McNally Bharat Engineering from hold to 'outperform' with a price target of Rs 340. "Given the huge investments in the metal industry and in mining infrastructure, these businesses of MBE are expected to witness robust growth in the next few years. We expect revenues to register 35% CAGR in the next three years along with margin improvement, with the company increasing its share of revenues from high margin businesses like mineral processing," the HDFC Securities note to clients said. "In view of the above, the company is poised for a robust growth in revenues and an improvement in its financial performance. However, despite the significant run up in the past few months, the stock is trading cheaper (20% discount) vis-a-vis its peer group companies," the note added.
Gayatri Projects
CMP: Rs 418.05
TARGET PRICE: Rs 570
Prime Broking has initiated coverage on Gayatri Projects with a 'strong buy' rating and a price target of Rs 570. "At current levels, the core construction business (net of build-operate-transfer value) is trading at a PE of 5.9 times our FY09(estimated) fully-diluted earnings per share, making Gayatri one of the cheapest stocks in the construction space," the Prime Securities note to clients said. "Order book position for Gayatri has grown nearly three-fold since end-FY06, providing high revenue visibility for the next 2-3 years. Its current order backlog stands at Rs 35 billion which is 5.3 times our FY08 (E) revenues -- one of the highest among peers," the note added.
Adani Enterprises
CMP: Rs 911.40
TARGET PRICE: Rs 1,048
Edelweiss Capital has initiated coverage on Adani Enterprises with a 'buy' recommendation and a sum of the parts valuation of Rs 1,048. "Adani Enterprises (AEL) is leveraging its track record and experience as a 5-star trading house to embark on an ambitious asset-backed diversification and expansion plan that will exploit emerging opportunities in the infrastructure space in India. It is investing in power generation and coal mining where AEL has significant trading experience and market share," the Edelweiss note to clients said.
CMP: Rs 418.05
TARGET PRICE: Rs 570
Prime Broking has initiated coverage on Gayatri Projects with a 'strong buy' rating and a price target of Rs 570. "At current levels, the core construction business (net of build-operate-transfer value) is trading at a PE of 5.9 times our FY09(estimated) fully-diluted earnings per share, making Gayatri one of the cheapest stocks in the construction space," the Prime Securities note to clients said. "Order book position for Gayatri has grown nearly three-fold since end-FY06, providing high revenue visibility for the next 2-3 years. Its current order backlog stands at Rs 35 billion which is 5.3 times our FY08 (E) revenues -- one of the highest among peers," the note added.
Adani Enterprises
CMP: Rs 911.40
TARGET PRICE: Rs 1,048
Edelweiss Capital has initiated coverage on Adani Enterprises with a 'buy' recommendation and a sum of the parts valuation of Rs 1,048. "Adani Enterprises (AEL) is leveraging its track record and experience as a 5-star trading house to embark on an ambitious asset-backed diversification and expansion plan that will exploit emerging opportunities in the infrastructure space in India. It is investing in power generation and coal mining where AEL has significant trading experience and market share," the Edelweiss note to clients said.
CALL
STRONG BUY HINDUSTAN UNILEVER&McNally Bharat